My Mortgage Is Over 50% Of My Income

Summary

Podcast Summary: The Ramsey Show Highlights – Episode: "My Mortgage Is Over 50% Of My Income"

Release Date: March 21, 2025

Introduction

In the episode titled "My Mortgage Is Over 50% Of My Income," The Ramsey Show Highlights addresses a critical financial dilemma faced by a caller whose mortgage payments consume a substantial portion of her household income. Hosted by the Ramsey Network, the episode delves deep into the caller's financial struggles, the complexities of managing multiple properties, and provides expert advice on navigating such challenging situations.

Caller's Financial Situation

The episode opens with the caller expressing distress over her current financial predicament. She outlines her mortgage payment of $4,500 per month, which constitutes approximately 50% of her combined household income. Specifically, her income varies between $4,000 to $6,000 per month due to the fluctuating nature of her self-owned business, while her husband contributes an additional $4,000 monthly.

"So on a really good month, your mortgage is still about 50% [of your income]." ([00:52] Financial Advisor 1)

The caller further elaborates on the challenges by mentioning the ownership of a second property. She reveals that they encountered significant issues while attempting to sell this second home, particularly a hefty $140,000 foundation repair, which deterred potential buyers.

"Apparently when we went into escrow and inspection and stuff, the foundation needs to be replaced and that was like $140,000." ([01:16] Caller)

Property Challenges and Financial Strain

The financial advisors probe deeper into the specifics of the second property. The caller shares that they owe approximately $6,650,000 on this house, which was initially listed for $1.1 million. Due to the foundation problem, prospective buyers were skeptical, leading to minimal interest and a rental profit of only $1,400 per month.

"So we owe about 6, 650,000 on it, and it was being listed for 1.1 million, but with the foundation issue, all the buyers were scared to even take it." ([01:51] Caller)

The advisors highlight the discrepancy between the caller's perception of profit and the actual financial implications, emphasizing that the sunk costs significantly impact the true profitability of the investment.

Decision-Making and Strategic Advice

As the conversation progresses, the financial advisors assess the caller's options. They discuss the feasibility of repairing the foundation versus selling the property as-is. The caller mentions the daunting prospect of obtaining a Home Equity Line of Credit (HELOC) to fund the repairs, which she describes as a "nightmare."

"I would have to pull out a heloc and the whole thing is just a nightmare." ([02:45] Caller)

One advisor cautions against incurring additional debt to fix the house, suggesting that selling the property in its current state might result in significant financial loss. They underscore the importance of avoiding further debt and recommend focusing on stabilizing their primary residence before addressing other financial obligations.

"I would not take out more debt to fix this house, so there's that." ([03:38] Financial Advisor 2)

Exploring Solutions: Renting vs. Selling

The discussion shifts to evaluating the caller's primary residence. The caller reveals that they purchased their current home for $460,000 in June. A recent consultation with a Dave Ramsey-affiliated realtor indicated that selling the house now would likely result in a $30,000 loss after accounting for closing costs.

"I got a Dave Ramsey realtor, and she told me, because we bought it just in June, that we'd probably with closing costs and everything, probably take about a $30,000 loss." ([05:01] Caller)

Faced with limited options, the advisors explore the possibility of renting out their primary home. The caller notes that renting in their area is relatively affordable, estimating rental income at around $2,000 per month. However, advisors caution against adding to their financial strain by incurring additional losses through selling.

"Yeah, the only thing is, I don't want you adding more loss to this in the form of $30,000 in fees." ([05:43] Financial Advisor 2)

Recommended Action Plan

The financial advisors propose a strategic approach to mitigate the caller's financial woes:

1. Stabilize Current Finances: Focus on maintaining the current residence to prevent further financial deterioration.
2. Address Property Issues Gradually: Avoid taking on additional debt by seeking alternative solutions to handle the second property's foundation problem without excessive borrowing.
3. Optimize Rental Income: Continue renting out the second property to cover the mortgage while exploring ways to maximize rental profits and minimize expenses.
4. Long-Term Financial Planning: Develop a comprehensive budget using tools like the EveryDollar app to gain better control over income and expenditures, ensuring sustainability.

"You can ride. I'd hang out for a little while in this home. If you can, to get right side up on it. You can make it. Then get out. Then rent, take care of this other place, estate away and get out of that." ([06:01] Financial Advisor 1)

Conclusion

The episode concludes with the host reiterating the importance of proactive financial management and seeking expert advice when faced with daunting financial challenges. The caller's situation serves as a cautionary tale about the risks of overextending financially, especially in the realm of real estate investments. The advisors emphasize the necessity of strategic planning, budgeting, and avoiding additional debts to reclaim financial stability.

Notable Quotes Highlighted

• "If not more of your income." — Financial Advisor 1 ([00:53])
• "Spill it." — Financial Advisor 2 ([01:11])
• "This has just been a nightmare." — Caller ([02:50])
• "I would not take out more debt to fix this house." — Financial Advisor 2 ([03:38])
• "I got a Dave Ramsey realtor..." — Caller ([05:01])
• "You can make it." — Financial Advisor 1 ([06:01])

Final Thoughts

"My Mortgage Is Over 50% Of My Income" offers valuable insights into managing overwhelming mortgage burdens and handling complex real estate situations. The episode underscores the importance of realistic financial assessments, avoiding excessive debt, and seeking professional guidance to navigate through financial crises effectively.

Transcript

[Host]

Brought to you by the EveryDollar app. Start budgeting for free today.

[Caller]

Hi. Thank you for taking my call.

[Host]

Sure.

[Financial Advisor 1]

What's up?

[Caller]

I'm in a mess. Well, I don't know. This is dramatic. Okay, so my mortgage payment is 4,500amonth, and we just bought this house in June and the income has changed and so I own my own business. So it's definitely. It fluctuates, but I make between 4 to 6,000amonth, and then my husband has an income of 4,000amonth currently.

[Financial Advisor 2]

Okay.

[Caller]

So that is. That's what we're looking at.

[Financial Advisor 1]

So on a really good month, your mortgage is still about 50%.

[Financial Advisor 2]

Ooh, mama.

[Financial Advisor 1]

If not more of your income.

[Caller]

Yeah. If not more. Yeah.

[Financial Advisor 2]

Okay. And you said the income changed. What was it before? Was it ever a good idea?

[Caller]

Well, probably. No. No, that is probably not there. We own another house too. I don't know. How much do you want to know?

[Financial Advisor 2]

I want it to. Let me tell me the tea. Spill it.

[Caller]

So we moved and we had another home and we were trying to sell it, and apparently when we went into escrow and inspection and stuff, the foundation needs to be replaced and that was like $140,000. So long story short, have that home.

[Financial Advisor 2]

Did you fix the foundation?

[Caller]

No, we are working on that. Because it's $140,000. This has just been.

[Financial Advisor 2]

Anyway, so tell me before you move on. So that house.

[Caller]

Yes.

[Financial Advisor 2]

What do you owe on it and what's it worth barring the fixed foundation?

[Caller]

So we owe about 6, 650,000 on it, and it was being listed for 1.1 million, but with the foundation issue, all the buyers were scared to even take it. So with the rent, we make fourteen hundred dollars profit a month.

[Financial Advisor 2]

Okay. Okay. Yeah. Yes and no. You and I's definition of profit is different because you've got a lot of money sunk into it. Okay.

[Caller]

100%.

[Financial Advisor 2]

Got it. So you've got this one house. If you fix the foundation, it's worth 1.1.

[Caller]

Yeah.

[Financial Advisor 2]

You haven't fixed it yet. Are you in the process of it or. Tell me more about that.

[Caller]

So we applied for permits and we're waiting on that. It can take up to five months. So we've just been working through that the last couple.

[Financial Advisor 2]

Would you pay for it?

[Caller]

Exactly. I would have to pull out a heloc and the whole thing is just a nightmare. So.

[Financial Advisor 2]

Okay. Have you done the research on if you were to sell it as is? What? I mean, I know you said certain realtors wouldn't Touch it. But I'm sure certain realtors would. Well, what would that look like as far as the value?

[Caller]

Well, we tried to give it away for even 950 and all the.

[Financial Advisor 2]

That doesn't feel like a giveaway. Let me. Let me. That's not a giveaway. That's. You just less the value of getting it fixed.

[Caller]

While we do owe about $150,000 in solar.

[Financial Advisor 2]

Okay, but that's not on the next buyer. You. You chose that, right?

[Caller]

Well, yeah. I just mean in order not to take.

[Financial Advisor 2]

For you to not take the hit. Yeah.

[Caller]

Yeah.

[Financial Advisor 2]

So I think you're gonna. You might. You might end up, like, eating. Eating a big loss on this house. You might. I mean, if you can carry it and get this foundation fixed in cash, then I. But I. But I would not take out more debt to fix this house, so there's that.

[Financial Advisor 1]

Can I ask really quick? How far away are these two houses? The one you're living in now versus the one.

[Caller]

How far a state away?

[Financial Advisor 1]

Oh, boy.

[Caller]

Six hours. Oh, yeah.

[Financial Advisor 2]

And you said there's also 150 in solar. That's a separate loan.

[Caller]

Yeah.

[Financial Advisor 2]

Okay. And there's. Stay away.

[Financial Advisor 1]

And you moved. You moved to where you are now because of your husband's job or your business?

[Caller]

My. Well, originally it was. It was my husband's job. He's. He's been in the military forever, so we moved here. And anyway, we're staying here. Yeah. Okay, so Shannon shouldn't have bought this house, but.

[Financial Advisor 2]

Yeah, tell me. Tell me about your current house, because this may be your way out of all of this. Your current house. What. What. What's. What do you owe on it and what's it worth?

[Caller]

So we bought it for 4. 60. 460,000. And when I just called a realtor, I got a Dave Ramsey realtor, and she told me, because we bought it just in June, that we'd probably. With closing costs and everything, probably take about a $30,000 loss.

[Financial Advisor 2]

Yeah. Okay. Yeah, you're probably right.

[Caller]

I mean, she's like, I don't know, based on it. Yeah. So.

[Financial Advisor 2]

So that's not an option. Like, selling that for profit's not an option for you right now? Which I wondered if it would be. Yeah. If I were you.

[Financial Advisor 1]

Well, what is rent? What if you guys were renting in. In your area right now, what would that set you back?

[Caller]

Yeah. So rent here is amazing. Well, relative. So we could. We could get a rent. Oh, the same equivalent home for maybe 2000 or 20 $200 a month at the most.

[Financial Advisor 2]

Yeah. The only thing is, I don't want you adding more loss to this in the form of $30,000 in fees.

[Caller]

Yeah.

[Financial Advisor 2]

So I ride. I'd hang out for a little while in this home. If you can, to get right side up on it. You can make it.

[Financial Advisor 1]

You can come up with that money.

[Financial Advisor 2]

Yeah.

[Financial Advisor 1]

Then get out. Then rent, take care of this other place, estate away and get out of that. It feels like that's the progression.

[Financial Advisor 2]

That's the only way. The good like you are getting some money from rent on this just to pay the mortgage. But it's a hot potato. I'm going to try to get out of this as quickly as I can before it burns your hand. Ooh, this is a tough one.

[Host]

Create your free every dollar budget today. The simplest way to budget for your life.